5 tips for just getting your business budget done
Don’t worry – this isn’t a long, in-depth or technical article on business budgeting. We wanted to share 5 tips for getting your business budget done and in place ready for your new financial year. Sometimes we can overthink it or be concerned about not doing it well enough and that can just prevents us taking action at all. Let’s just get it done.
- Block out some time to do it
It won’t happen unless we block out some dedicated time to just focus on doing this. If you don’t particularly enjoy numbers or feel you have the time to spend a whole day on it, then you can book small slots of time that you can commit to.
We would recommend setting your budget for the next financial year between 1 and 3 months before your year end. You need time to prepare it so you can have it in place before the new financial year but you don’t want to do it too early because using the information from the current financial year will really help you.
- Involve other people
If you have people in your business who can help then let them. They may have budget responsibilities in which case you can ask them to put forward their budgets to you for the areas they are responsible for. Others may be able to do some of the leg work for you – contacting suppliers for example to help you estimate your costs better.
You may want to work with a bookkeeper, part-time FD or accountant to help you set your budget for the year. They can give valuable insights from their experience and they may well notice things that you haven’t as you are so close to your business.
- Decide what you want to achieve in the coming year
We wouldn’t recommend setting your budget only on past performance. It is really important to factor in what you want to achieve in the coming year – there may be financial objective you have, new products or services you are going to be launching or significant other changes you are making in your business which you need to reflect.
If you already have a business plan for your year ahead, then this is easy because you will in there already have your key financial objectives. You can then set your budget to support your achievement of these financial objectives.
If that business plan for the year ahead isn’t in place yet, then spending some thinking time before you start is really helpful. Working through questions such as – what do you want your turnover to be? what do you want your profit to be? where will you need to invest more money this year? what do you want to earn from the business this year?
- Create a simple spreadsheet and get started
It doesn’t have to be complicated.
You could start by extracting a profit & loss report for your last year from your accounting software and pulling this out into an excel spreadsheet. This will give you all the headings you need and you can just then make sure you have a column for every month. Taking this approach, will encourage you to consider each line of your budget and you will also easily have to hand what the numbers where for each month and for each line in the last year.
You may want to create additional budget lines to reflect new types of revenue or new types of expenditure.
You can also then add additional tabs to the spreadsheet if you want to keep a record of how you built each budget line and put more detail in there.
- Commit to using and reviewing your budget
Once you have all those numbers plotted in, does it give you the desired outcomes? If not, then it’s perhaps time to review this and involve someone else before you finalise it.
Once you have finalised your budget and got it to a point that you are happy with, make a decision to commit to it. You can of course evolve your budget over the year if you want to but it is important to make a commitment to your initial budget for the year ahead.
If your bookkeeping is done in an accounting system, then get your budget loaded into your software and then you can compare your actuals against budgets every single month and you can then see if you are on track or not. If not on track, it then enables you to be pro-active and to take action to help you in future months to get closer to your budget.
Finally ………………..
If you have read this far and have made a commitment to get this done then that’s great. If you feel you need some help with it, then there are plenty of people who can help. We are one of those and we help business owners set their budgets and import them into their accounting software. You can read more here about how we can help you.
Contact: lynne@thebookkeepingdepartment.co.uk Tel: 01462 455455